Congratulations! You won a breakfast cereal competition. You can choose one from the following prizes:

a) $100,000 today

b) $180,000 at the end of 5 years

c) $11,400 a year forever

d) $20,000 a year for the next 10 years

e) $6,500 next year and increasing thereafter by 6% a year forever

1. If the interest rate is 12%, which is the most valuable prize? (10 points)

2. If the interest rate is 8%, which is the most valuable prize? (10 points)